HIGH COST OF BIRTHS IN THE SOUTH AFRICAN PRIVATE HEALTHCARE SECTOR
Matan Abraham, Tiffany Elliott
18 October 2017 | 10:15 – 11:15 | Committee 4
Relevant practice area(s):Healthcare
Suggested audience knowledge level: Foundational
Abstract:
We investigate the maternity healthcare expenditure within the South African private healthcare sector, using data of a number of schemes in South Africa (making up approximately half the industry).
This issue is pertinent because the Caesarean section rate in the South African private sector is amongst the highest in the world.
Key areas of investigation are the relationships between maternity expenditure and delivery methods as well as the mothers antenatal expenditure.
Expected Outcomes:
An understanding of the nature of childbirth and delivery methods within the private healthcare system in South Africa and how this contrasts to international norms.
Consideration of the significant expenditure consumed by pregnancies and births in the South African private healthcare sector.
An understanding of cost implications for maternity expenditure of decisions made during the pregnancy and birth of the child.
An insight into how these issues relate to considerations around factors such as quality of care, medical indemnity insurance and managed care interventions.
BIG DATA! BIG INSIGHTS OR BIG PROBLEMS? ARE YOU SURE YOU ARE READY FOR THIS?
Dimitri Anagnostopoulos
17 October 2017 | 10:15 – 11:15 | Bill Gallagher Room
Relevant practice area(s):Short-term Insurance, Data Analytics
Suggested audience knowledge level: Foundational and Intermediate
Abstract:
One of the popular words on the buzz these days is Big Data and how it can transform the financial industry. Big words (aka buzzwords) need to be explained to more practical terms before they can be meaningful.
Financial institutions ambition is to move from being data poor to being data rich. Big data can certainly make you data-super-rich and help you get closer to your customers (a little too close some times). However, having the data does not mean you automatically become insight rich.
Institutions need to see big data as a tool-set that can help you or break you. To achieve the former, you need to prepare the organisation in many ways. Big data is not a case of plug-n-play initiative that simply comes with solutions. Do you have a healthy Big-Data-Culture to improve your insights and drive appropriate actions?
FROM BARBECUES TO BRAAIS: A GLOBAL PRACTITIONER’S PERSPECTIVE ON LIABILITY DRIVEN INVESTING
Shalin Bhagwan
17 October 2017 | 13:15 – 14:15 | Committee 4
Relevant practice area(s):Investments
Suggested audience knowledge level: Intermediate
Abstract:
Liability Driven Investment strategies dominate the investment thinking of both pension funds and insurers. We take a global perspective and consider the evolution of these strategies by looking at implementation nuances in the UK, USA and South Africa. We focus on how the implementation of these strategies, in the UK and the USA, has changed over the last decade following the global financial crisis (GFC) and what impact this has had on pension funds following these strategies. We will also cover lessons learnt as a portfolio manager for the LDI strategies of some of the worlds largest pension funds through the default of Lehman. We use real world examples, based on the speakers own experience, to illustrate these key developments and their impact on pension funds and insurers.
EXPLORING THE INTERPLAY BETWEEN CORPORATE INNOVATION, RISK MANAGEMENT AND INTERNAL GOVERNANCE
Premal Bhima
Paper with presentation; Audio Recording
18 October 2017 | 13:45 – 14:45 | Ballroom 1
Relevant practice area(s):Enterprise and Financial Risk Management (ERM)
Suggested audience knowledge level: Intermediate
Abstract:
Business leaders no longer question whether it is necessary to innovate but rather, which activities to pursue. While innovation is an imperative for organisations, it is inextricably linked to risk-taking and is compounded by high levels of innovation failure rates. Therefore, there is a clear requirement to understand the interplay that risk management and governance have in shaping the design of the innovation process.
The aim of this paper is to explore the relationship between corporate innovation management, internal governance and risk management, and to understand the dynamics between these constructs. The intention is that this contributes to the effectiveness of organisations when undertaking innovation activities by using adequate risk management and governance controls.
An exploratory research method was adopted based on an inductive reasoning approach to gain insight into this interplay. Semi-structured, in-depth interviews were conducted with senior
experts across six industries. The respondents had high levels of seniority, ranging from C-suite executives, managing directors and other executives, to senior managers. Thematic analysis was used to analyse the data.
A conceptual integrated innovation management model was carefully formulated based on the findings to embed risk management and governance within the iterative innovation process, which is
influenced by the contextual attributes. The results found that risk management and governance remain key tools to manage innovation and become more significant as the innovation process evolves. This research will assist organisations in managing innovation uncertainty by using adequate risk management and governance controls for improved sustainability.
THE EVOLUTION OF END-OF-LIFE CARE: OBSERVING THE PAST TO SHAPE THE FUTURE
Pieter Botha
18 October 2017 | 10:15 – 11:15 | Committee 4
Relevant practice area(s):Healthcare
Suggested audience knowledge level: Foundational
Abstract:
The look and feel of death has significantly changed over the last century, and is still rapidly evolving.
Where we die, what we die from, the age at which we die and the cost of dying have significantly shifted over the last century.
This yields very interesting insights into how the overall attitude towards death has shifted and which considerations are now the most important at the end of life, compared to a century ago. Even more-so, this highlights significant shortcomings in our end-of-life care and insurance offerings, and currently how key stakeholder needs aren’t met.
How can we use our actuarial skill set to address these shortcomings and shape the future of end-of-life care and insurance? Death is not a problem that can be solved – mathematically or clinically, but benefit designs that facilitate optimal care considerations and being a driving force behind policy reforms are well within our capabilities.
This presentation is designed to be thought-provoking and encouraging of a discussion on a topic so easily and often skirted due to the uncomfortable nature of confronting one’s own
mortality.
INCORPORATING WIDER FIELDS RISK MANAGEMENT INTO SHORT-TERM INSURANCE
Conrad Calitz, Sarvesh Maharaj
Presentation
17 October 2017 | 10:50 – 11:50 | Bill Gallagher Room
Relevant practice area(s):Short-term Insurance, Data Analytics
Suggested audience knowledge level: Intermediate
Abstract:
The Medical Schemes act prevents Medical Schemes from performing various rating and underwriting actions that Short-Term Insurers are allowed to perform. These limitations placed on Medical Schemes include community rating, limited underwriting and minimum cover provided as per the Prescribed Minimum Benefits.
The factors mentioned above have put tremendous strain on Medical Schemes who are under pressure to keep contributions low in order to increase membership.This has necessitated the development and implementation of sophisticated methods to manage risk, such as:
Provider profiling;
Parts baskets analyses;
Risk based capitation agreements;
Pre-Authorisation;
Case Management; and
Preventative benefits.
This can be contrasted with the Short-Term Insurers who have considerable pricing flexibility. In addition, underwriters also have various risk mitigations available to them including: increasing excesses, excluding benefits, cancelling and declining cover.
Our presentation will illustrate how these sophisticated techniques developed for healthcare can be used in the short-term industry to reduce cost and ultimately lead to better experience for clients.
TECHSTARS: SUN EXCHANGE, SPATIALEDGE, BYTE MONYE, AVENEWS-GT
Abraham Cambridge, Frank Ortmann, Marlon Shaw, Shalom Ben Or
Presentation; Audio Recording
17 October 2017 | 13:15 – 14:15 | Bill Gallagher Room
Relevant practice area(s):Wider Fields
Suggested audience knowledge level: All
ENTREPRENEURSHIP SESSION: NAKED INSURANCE, GIRAFFE, EIGHTY20
Sumarie Greybe, Shafin Anwarsha, Illana Melzer
Presentation; Audio Recording
18 October 2017 | 13:45 – 14:45 | Ballroom 2|3|4
Relevant practice area(s):Wider Fields
Suggested audience knowledge level: All
CRASH BAM BOOM – PHI / DISABILITY INCOME – GROUP BUSINESS AT RISK?
Jason Cooper-Williams, Michael Prodehl
17 October 2017 | 14:45 – 15:45 | Bill Gallagher Room
Relevant practice area(s):Life Insurance
Suggested audience knowledge level: Foundational
Abstract:
The aim of the presentation is to give an overview of PHI/ disability income experience in the group market.
Firstly we look at some context.What did the industry experience in the 90’s?
From there we turn to look at the results released by some of the big insurance companies in the past year or two. Currently the industry is under severe pressure, with some of these insurance companies reporting massive losses due to PHI / disability income business.
Thereafter we take a high-level look at our internal experience, both the PHI/disability income incidence and termination rates.
Can we find any links between disability income experience and the economy?
What have we learnt from other markets who experienced similar losses (for example Australia) and how can we use this to improve our current situation?
How should we manage this going forward?
ALLOWING FOR CHANGES IN THE GENERAL BUSINESS ENVIRONMENT IN CLAIMS RESERVES
Lukas Ehlers, Shuaib Ghoor
18 October 2017 | 10:15 – 11:15 | Bill Gallagher Room
Relevant practice area(s):Short-term Insurance
Suggested audience knowledge level: Intermediate
Abstract:
The methodology used to calculate reserves for Short-Term Insurers is greatly focused on projecting the future claims experience with reference to past claims experience. Changes to the external environment can impact the appropriateness of methods relying on past experience. Actuaries usually overcome this by making various manual adjustments to the data and/or assumptions based on judgement.
The paper will demonstrate a method for calculating the claims reserve in a way that not only takes past claims experience into account but also allows for changes in the external business environment. This method involves in quantifying the impact that each component of the environment has on the reserve through the use of Generalized Linear Models (GLMs).
We will also examine how the GLM based method compares to other actuarial triangulation approaches, including methods used to allow for changes in the external environment.
WHEN SHOULD YOU DIE – WHAT WOULD A VULCAN DO?
Daniel Erasmus
18 October 2017 | 11:45 – 12:45 | Ballroom 1
Relevant practice area(s):Healthcare, Life Insurance
Suggested audience knowledge level: Foundational
Abstract:
An increase in life expectancy is generally acknowledged to be one of the main indicators of growing prosperity and wellbeing of the modern age. I consider this theme in more detail and postulate the idea that “too much of a good thing” also applies to life expectancy.
Until now, the value of additional life years couldnt be adequately assessed within the current linear framework of more is better. Consideration of the quality of life in each additional life year is essential to contextualising the value of living longer. Fundamentally, my research answers the question of when is the ideal time is to die, rather than how one can maximize your life expectancy.
The research thus examines the intersection between increased longevity, transposed with the general/frequent decline in the quality of life at advanced ages. This is considered in terms of key quality metrics including health and physical status, financial status, emotional and mental status as well as relational status at advanced ages. The aim is to quantify these factors and illustrate the impact of the results for a cohort of healthy lives starting at age 35.
The results are quantified in terms of a quality of life index. Ideally this index value will gradually slope downwith increasing age up to death. At advanced ages, the prospect of a sudden decrease in the quality index is significantly increased. The results quantify the point in future at which the quality of life would be significantly lower in subsequent years compared to those immediately preceding this point. This point is deemed the maximum quality adjusted age (MQAA). I argue that ideally your actual age should not exceed the MQAA.
The analysis is based on a detailed review of medical scheme data as well as morbidity and mortality data from the life insurance industry in South Africa. Financial projections are based on current projected annuity rates, investment returns as well as average savings statistics and indicators from Stats SA and ASISA. The analysis is also complimented by desktop research and stakeholder interviews.
The findings of the research indicate that as life expectancy increases there is a simultaneous increase in the probability and consequent risks that a persons life expectancy exceeds the MQAA. The results illustrate the need to consider not only the number of additional life years gained, but also the quality of those years, as a key metric for an aging population.
REGIME-BASED TACTICAL ALLOCATION FOR EQUITY FACTORS AND BALANCED PORTFOLIOS
Emlyn Flint
18 October 2017 | 11:45 – 12:45 | Bill Gallagher Room
Relevant practice area(s):Investments
Suggested audience knowledge level: Intermediate
Abstract:
It is now an accepted fact that the majority of financial markets worldwide are neither normal nor constant, and South Africa is no exception. One idea that can be used to understand such markets and has been gaining popularity recently is that of regimes and regime-switching models. In this research, we consider whether regimes can add value to the asset allocation process. Four methods for regime identification – economic cycle variables, fundamental valuation metrics, technical market indicators and statistical regime-switching models – are discussed and tested on two asset universes – long-only South African equity factor returns and representative balanced portfolio asset class returns. We find several promising regime indicators and use these to create two regime-based tactical allocation frameworks. Out-of-sample testing on both the equity factor and balanced asset class data shows very promising results, with both regime-based tactical strategies outperforming their respective static benchmarks on an absolute return and risk-adjusted return basis.
“TEST AND TREAT”: CHANGING THE FACE OF INSURANCE FOR PEOPLE LIVING WITH HIV?
Kadene Gibbs, Matthew Procter
17 October 2017 | 10:50 – 11:50 | Ballroom 2|3|4
Relevant practice area(s):Life Insurance
Suggested audience knowledge level: Intermediate
Abstract:
Recent updates to WHO guidelines to test and treat HIV+ individuals are expected to significantly increase life expectancy. Morbidity, which drives HIV mortality, is also expected to decline considerably. While the full impact of test and treat remains to be seen, mortality risks associated with HIV are well understood, allowing us to classify HIV+ individuals into homogenous groups. We explore the potential impact of these guidelines on underwriting, product design, pricing and the possibility of offering comprehensive living benefits to HIV+ lives.
MODERNISING ACTUARIAL EDUCATION: RECENT LOCAL AND INTERNATIONAL DEVELOPMENTS
Andrew Gladwin
18 October 2017 | 13:45 – 14:45 | Committee 4
Relevant practice area(s):Education
Suggested audience knowledge level: Foundational
Abstract:
The global actuarial profession is now going through a period of significant change regarding actuarial education. This has been prompted by a number of actuarial professional associations around the world acknowledging that the world has changed, and what will be needed from the actuarial profession is also changing very fast. At a global level, this has been led by the Syllabus Review Task Force of the International Actuarial Association (IAA). This Task Force has come up with a new global actuarial syllabus setting out a minimum standard which the Task Force believes is needed to be an effective actuary in the 2020s. This new global syllabus is expected to shortly be adopted officially by the IAA and is already influencing changes taking place in the syllabuses of many actuarial associations around the world. Some of these changes including the incorporation of the mathematical techniques and professional impacts of the big data revolution, as well as more focus on the delivery skills of an actuary, including communication and professionalism. There is also a focus on defining the depth of knowledge and thinking skills required for each part of the syllabus to help define more clearly the competencies needed for an actuary. All of this will also allow the actuary to operate in an increasing range of roles and industries, using a powerful technical toolkit backed with the professional promise.
YOU’VE BEEN HACKED
Riekie Gordon, Karl Meissner-Roloff, Roger Truebody Chubb
17 October 2017 | 14:45 – 15:45 | Ballroom 2|3|4
Relevant practice area(s):Enterprise and Financial Risk Management (ERM)
Suggested audience knowledge level: Intermediate
Abstract:
With the advances in technology and connectivity resulting in changes from product systems to ways in which customers and employees interact with companies, businesses are forced to “tighten up on blocking cybercrime or face financial ruin” (timeslive.co.za February 2017). Currently cyber risk is not being taken seriously enough, and local protection offerings against this risk is limited.
In this talk we will consider some measures, as well as current options for insurers to deal with cyber risk. We will consider some quick wins aligned to contemporary vulnerabilities and cyber breaches. We will further explore second order effects and discuss future trends or expected developments.
Expected outcomes:
Understanding cyber risk and attacks that have happened
Future trends – its only going to get worse
Appropriate responses – what are some companies doing
Security measures – what can or should be done
Insurance protection that can be offered
Second order effects (e.g. reputational risk)
BEYOND GLMs – AN INTRODUCTION TO ADVANCED PREDICTIVE ANALYTICS
Jean-Francois Greeff
Presentation
17 October 2017 | 13:15 – 14:15 and 14:45 – 15:45 | Committee 2
Relevant practice area(s):Data Analytics
Suggested audience knowledge level: Foundational and Intermediate
Abstract:
This two-part workshop will serve as an introduction to advanced predictive analytics for the actuary who is familiar with Generalized Linear Models. During the workshops, attendees will discuss some of the problems faced by modellers when working with GLMs and be introduced to methods used to address these problems. The workshop will be interactive and having a laptop with R is recommended.
Part 1 will be dedicated to discussing Tree-based models. Topics will include: Classification and Regression Trees; pros and cons of trees; bagging, and random forests. Time permitting, we will introduce the concept of boosting and gradient boosted machines.
Part 2 will be dedicated to discussing Regularized Regression. Topics will include: “Wide” data and the problem of variable selection; the curse of dimensionality; penalized regression; ridge, Lasso, and elastic net lasso regression; and using cross-validation to estimate tuning parameters.
ACTUARIAL ADVICE IN THE DC SPACE ON INCOME ADEQUACTY
Natasha Huggett-Henchie
18 October 2017 | 13:45 – 14:45 | Bill Gallagher Room
Relevant practice area(s): Retirement Matters
Suggested audience knowledge level: Foundational
Abstract:
Actuarial advice on the DC space on income adequacy
The actuarial profession has not got involved adequately enough in the DC space, especially in as far as advice on the appropriate levels of income that people should be targeting and the right investment approaches to deal with this issue. Since the advent of DC, trustees and members focus only on the pot of money (Fund Credit) and the return earned. If the focus is ensuring that people achieve financial security in their post-retirement years, then to simply check that Fund Credit balances match the corresponding asset values is not good enough. We should be looking at member level funding levels (relative to DB type targets), the actions needed to address shortfalls (in the same way as we do for DB funds), investment strategies, post-retirement income sustainability and longevity risk management.
DC Projections models and reports are valuable tools in helping trustees and members understand these issues
HOW MACHINE LEARNING IS THE DEATH OF THE CONVENTIONAL ACTUARY
Paul-Willem Janse van Rensburg
17 October 2017 | 14:45 – 15:45 | Bill Gallagher Room
Relevant practice area(s):Professional Matters, Wider Fields
Suggested audience knowledge level: Foundational
Abstract:
The advent of machine learning has introduced a major shift in how businesses operate, from how it interacts with its clients, to the products it offers, to how it makes its key business decisions
It has merged two fields, software development and statistics, to produce an approach to modelling that changes as its environment changes and allows building of these models by person’s previously viewed as non-experts
This poses a threat to the role the traditional actuary plays in a business as a key decision maker
SYSTEMIC RISK FOR INSURERS – HOT AIR OR SMOULDERING VOLCANO?
David Kirk
18 October 2017 | 11:45 – 12:45 | Ballroom 2|3|4
Relevant practice area(s):Enterprise and Financial Risk Management (ERM)
Suggested audience knowledge level: All levels
Abstract:
Systemic risk within financial services has remained a major topic since the 2007/2008 Global Financial Crisis. “Too Big To Fail”, “Globally Systemically Important Financial Institutions”, “Recovery and Resolution Planning”, the “Financial Stability Board” and other outcomes clearly indicate a major concern for regulators that systemic risk hasn’t been well managed in the past. Insurance hasn’t escaped this net, with new international capital standards proposed for globally active or systemically important insurers. Our own South Africa regulators seem to support this view and are convinced of the dangers of systemic risk. Our significant “bank owned insurance groups” and arguably market concentration may also contribute to this risk.
Recent UCT research placed Old Mutual, MMI, Sygnia and Coronation as systematically important institutions alongside major banks. Is this a correct reflection of systemic risks within non-bank financial institutions?Perhaps this reflects the risk of “Run on Funds” or other less widely recognised risks.
Several global industry bodies support the view that systemic risk in insurance has been overstated.
This presentation will briefly address the origins of the concerns around systemic risk (perhaps particularly for those entering the working world before 2008), what regulators have been doing since then, and provide an assessment (literature review, surveys, measurement and independent thought) of the extent of systemic risk within insurance in South Africa.
THE IMPACT OF NON DISCLOSURE ON THE SOUTH AFRICAN LIFE INSURANCE INDUSTRY –
FEEDBACK FROM SCOR’s INDUSTRY WIDE NON DISCLOSURE SURVEY
Pedrie le Roux, Duane Hoffeldt
18 October 2017 | 10:15 – 11:15 | Ballroom 2|3|4
Relevant practice area(s):Life Insurance
Suggested audience knowledge level: Foundational
Abstract:
SCOR Africa has carried out an industry wide survey which has investigated the levels of non-disclosure currently prevalent in the South African market, what insurers are doing to identify and act on this and the detrimental impact this is having on insurers, distributors and the end customer. The key differentiators of this session are firstly to highlight the financial impact that non-disclosure is having on the South African industry but also to identify what insurers can do proactively to identify and ultimately reduce the levels of non-disclosure which can have a beneficial impact for all stakeholders involved.
Expected outcomes:
This session will initially present the key findings from our survey including;
Industry best practice in terms of identifying, monitoring and communicating levels of non-disclosure
Various methods used to identify non-disclosure
Benchmarking of current levels of non-disclosure across the industry
Market practice for treatment of non-disclosure
The financial impact of non-disclosure on the industry and your business and what impact reducing levels can have
The session will also look at data analytical techniques which are used in other markets to predict under disclosure and establish whether this can be applied effectively in the South African market.
The final aspect of our session will look at what impact lower levels of non-disclosure and a more robust framework for identifying it could have on the customer journey in South Africa.
REPLACING THE INCOME REPLACEMENT RATIO – BETTER WAYS OF CALCULATING AND COMMUNICATING POST-RETIREMENT LIVING STANDARDS
Joanna Legutko
17 October 2017 | 14:45 – 15:45 | Committee 4
Relevant practice area(s):Retirement Matters
Suggested audience knowledge level: Foundational
Abstract:
Income replacement ratios are the most common way of formulating retirement targets, and monitoring individuals’ retirement readiness. These ratios can however be problematic, partly because they often do not correctly account for the impact of tax, savings rates and work related expenses, and partly because they can ignore some of the longevity and investment risks retirement fund members are exposed to.
This paper takes the position that the objective of retirement saving is to smooth consumption over the lifetime. Therefore consumption, rather than income, replacement ratios could be a more meaningful measure of whether an adequate post-retirement living standard is being targeted. Consumption can be approximated by from income by adjusting income for non-consumption items such as savings and tax. In some ways, financial planners make such an adjustment, in a very generic way, by setting income replacement ratio targets which are less than 100%.
This paper makes such adjustments more explicitly by individually calculating the consumption replacement ratios projected for a sample group of fund members, and comparing them to the reported income replacement ratios these members are expecting to achieve. The paper analyses the effect each change in the replacement ratio calculation has on the members expected retirement outcome, and comments on which measure is
more appropriate for retirement planning in South Africa.
UNLOCKING NON-TRADITIONAL DATA FOR RISK ANALYTICS
Rendani Mbuvha
18 October 2017 | 11:45 – 12:45 | Committee 2
Relevant practice area(s):Data Analytics
Suggested audience knowledge level: Foundational and Intermediate
Abstract:
This workshop will provide practical ways for incorporating non-traditional data such as speech, text and images to enhance our understanding of actuarial and financial risks. Participants will work through a short exercise on how to build predictive models on newsfeed data using bag-of-words features(rating factors) in R. Details on how to extract meaningful features using Mel-frequency Cepstral Coefficients (MFCCs) for speech and histogram oriented gradients for images will be discussed. This will be further motivated by a practical short-term insurance example of using convolutional neural networks on dashcam images to detect distracted drivers.
THE ROLE OF THE ACTUARY IN RISK MANAGEMENT – WHAT ARE WE DOING HERE?
Carike Nel, Jaco van der Merwe, , Saffiya Omar, Lafras Eksteen
17 October 2017 | 10:50 – 11:50 | Ballroom 1
Relevant practice area(s):ERM
Suggested audience knowledge level: Foundational
Abstract:
This topic covers 3 practice areas: Life, Short-term and ERM.
This session will include a panel discussion and presentation of the results of an industry survey conducted by the authors.
It aims to explore the role and capability of the actuary as a risk manager, as opposed to the more traditional risk quantifier. It also considers whether as actuaries we possess the requisite skill set and training to add the necessary value in this field.
Key objectives:
To assess the readiness of actuaries to fulfil risk management roles and responsibilities.
To determine the extent to which actuaries are employed in risk management functions
To assess the role and effectiveness of the Head of Actuarial Control (HAC) function in particular.
To assess the maturity and effectiveness of the risk management system and controls, for example the extent of cooperation between the different control functions (Risk, Compliance, Actuarial, Internal Audit).
To investigate the practical challenges faced by actuaries in implementing SAM Pillar II and III.
To explore the extent and potential impact of Line of Defence “overlap” e.g. HAC vs external audit.
Panel:
Panel member 1: HAC of a large local insurer
Panel member 2: Reporting actuary at a large local insurer, also involved in risk management
Panel member 3: Non-actuarial risk management specialist at a large local insurer
Panel member 4: Internal auditor at a large local insurer
Panel member 5: External auditor of a large local insurer
CUTTING THROUGH THE BLOCKCHAIN HYPE
Louis Rossouw
18 October | 11:45 – 12:45 | Committee 4
Relevant practice area(s):Wider Fields, Enterprise and Financial Risk Management (ERM)
Suggested audience knowledge level: Intermediate
Abstract:
Many projects, start-up companies and collaborations based on blockchain technology are being explored. These include inter-bank ledgers, health data blockchains and reinsurance initiatives. IT companies are offering virtual environments to run and experiment with blockchain as a service as well as offering distributed ledger services. Blockchain technology seems to be at the top of the hype cycle.
This presentation will briefly re-express the core elements of the technology that differentiates it and then use this understanding to cut through much of the hype surrounding blockchain technology.
It will showcase some of these projects and show how these projects are truly embracing all aspects of the technology while others, though still innovative, are using little or only elements of the concepts behind blockchain technology.
“MARK MY WORDS”
Francois Strydom, Burt Verster, Matt Smith
18 October 2017 | 13:45 – 14:45 | Committee 4
Relevant practice area(s):Education
Suggested audience knowledge level: Foundational
Abstract:
Dear Actuarial Society
My name is Mark and I am an algorithm.
I am attempting to improve the actuarial education experience for students, lecturers and exam markers. I have been designed to mark past paper attempts and provide feedback to students in real-time.
I would like to introduce myself to you at the convention. I am still young and have a lot to learn, but I would like to share my story with you, including:
How I was created,
Examples of my work,
High-level performance metrics, and
My future.
I look forward to meeting you.
Regards
Mark
FUTURE OF INSURANCE – WHAT IS THE FUTURE OF INSURANCE IN THIS CHANGING WORLD? INCORPORATING THE INTERNATION INCREDIBLE CURIOUS ADVENTURE – THE MOVIE
Peter Temple
17 October 2017 | 13:15 – 14:15 | Ballroom 2|3|4
Relevant practice area(s):Professional Matters, Wider Fields
Suggested audience knowledge level: All levels
Abstract:
We face a world of where the nature of uncertainty is changing. The future is collapsing into the present at a faster pace than the past can be used to extrapolate the future. In fact the past is no longer an indication of the future at all. We have convergence of many factors – biological, physical and digital. This presentation will share insights from research conducted with leading insurance CEOs, Futurists, Academics and Consultants both inside and outside of the insurance industry. The presentation will cover high level themes emerging from the markets and highlight key sub-trends in those themes. The presentation will challenge you to think how future-fit you and your organisation are.
BLOCKCHAIN APPLICATIONS TO INSURANCE – WHEN IS BLOCKCHAIN THE APPROPRIATE SOLUTION?
Periklis Thivaios
18 October 2017 | 11:45 – 12:45 | Committee 4
Relevant practice area(s):Wider Fields, Enterprise and Financial Risk Management (ERM)
Suggested audience knowledge level: Foundational
Abstract:
* Blockchain is a new technology that has attracted significant attention in the recent past
* Several blockchain applications have been proposed, with the potential to transform and disrupt the insurance industry
* However, few insurance practitioners (and not only) understand what blockchain really is, where it can be applied and how
* It is important therefore to go beyond the hype and understand, first i) the technology and ii) more importantly the business applications that blockchain can support
* As such, blockchain needs to be understood as a solution to relevant business problems, rather than as a silver bullet to the insurance industry’s challenges and inefficiencies
* A structured approach to understanding blockchain and the areas where it is mostly applicable is essential
* The approach starts with conceptual considerations, is followed by operational considerations and lastly by execution options
* Conceptual considerations include the need for time sequencing, the distribution of data across players and the nature of the data to be block-chained
* Operational considerations have to do with the participants, the architecture and the permissions
* Execution options evaluate the benefits of action, inaction and the speed of adoption
* Only once the above considerations have been thoroughly analysed can an insurance firm be confident that investing in blockchain can be beneficial to its business needs.
* Alternatively, just like with the rise of other ‘ground breaking’ technologies in the past, investments may end up being underutilised, living short of expectations and possibly being written off due to the impractical nature of their application
* The insurance industry, due to its complex nature and specific role in the economy and the society, requires that the generic blockchain doctrines be deconstructed and applied to its specific needs
CREDIT ENHANCEMENT, RISK MANAGEMENT & STRUCTURED FINANCE FOR ACCELERATED INVESTMENT AND ECONOMIC GROWTH IN AFRICA
Michael Tichareva
17 October 2017 | 10:50 – 11:50 | Committee 4
Relevant practice area(s):Banking
Suggested audience knowledge level: All levels
Abstract:
The topic explores the problems currently being faced by African economies to achieve increased infrastructure development, trade and accelerated economic growth. The opportunities are many and entrepreneurial spirit is evident. However, the funding support structures are inadequate, thus constraining the full development of entrepreneurship and the African economies.
These problems include lack of expertise to develop well-structured projects and transactions for bankability given that most of Africa is below investment grade. Real and perceived political risks magnify the problems. This implies that investors are not attracted at an accelerated pace that would lead to huge economic growth. It takes time and effort to change the mind set of investors and this requires investment in understanding the real problems and developing appropriate solutions.
The problems are not limited to large infrastructure funding but to many other activities that include trade finance and working capital finance for small and medium sized businesses. Banks apply traditional funding models, often requiring strong balance sheets in order to manage their risk exposures. Basel II and III have made banks even more conservative. On the contrary, most of the great ideas that require funding are developed by entrepreneurs who have no balance sheet to attract financing, hence would not qualify for traditional bank finance.
The possible solutions are explored that include improved project and transaction structuring, improved risk management from end to end, credit enhancement solutions and limited recourse structured financing. A combination of traditional and non-traditional models of finance are explored. Practical examples to illustrate the solutions areshared.
The objectives of the solutions is to attract funding from a variety of sources to promote infrastructure investment, trade finance and entrepreneurial development in Africa, hence job creation, poverty reduction and accelerated economic growth.
REGULATORY UPDATE
Suzette Vogelsang
Presentation
17 October 2017 | 14:45 – 15:450 | Ballroom 1
Relevant practice area(s):Regulatory
Suggested audience knowledge level: Foundational
Abstract:
The regulatory landscape in South Africa is ever evolving with a number of key changes in legislation expected in 2017 and 2018. This is all in the backdrop of fundamental changes in the way the financial sector will be regulated in South Africa going forward. In this session Suzette Volgelsang from the FSB will provide an overview and status update of the key legislative and regulatory changes and give some insight on how they will be implemented.
IFRS 17 – PROCESS AND DATA IMPACTS
Andrew Warren
17 October 2017 | 13:15 – 14:15 | Ballroom 1
Relevant practice area(s):Life Insurance
Suggested audience knowledge level: Intermediate
Abstract:
The accounting reporting standard IFRS 17 – Insurance Contracts was launched in May this year after almost 20 years in development. The implications on the changes to determining the liabilities and provisions for insurance contracts, and the resulting income statement, have been the main areas of discussion during this period. Obtaining a financial reporting framework that creates a level of consistency between insurers, both “long-term” and “short-term” (to use the South African legal definitions), as well as consistency with non-insurance operations has been the key focus.
Now that the standard has been finalised, and the “rules” for determining the liabilities for insurance contracts set, the importance of the broader business implications of the standard now come to the fore. Under IFRS 4 the actuarial process can easily be separated from the finance process, with the required “change to the life fund/change in actuarial liabilities” (or some similar terminology) posted to the accounting general ledger, and the data, systems and process audit of these running (to some degree) in isolation of the financial audit. Under IFRS 17, the statement of comprehensive income is, at a conceptual level, the same as an analysis of surplus. Also, the Contractual Service Margin (CSM) behaves, once calculated at recognition, like a retrospective reserve, with both accounting and actuarial attributes.
Under IFRS 17, the financial reporting process, of which the actuarial projection and discounting process is one element, will be a combined actuarial and finance competence. Data, systems,
process and people will need to be integrated, and for the actuaries working in financial reporting, a greater understanding of the end-to-end financial reporting process is needed.
In this session, we will hold a panel discussion with an insurance auditor, an insurance systems expert and a data process expert to discuss case studies and experience from a similar environment, IFRS 9 Financial Instruments, and bring a wider view of the work needed to be done by actuaries in life and short-term insurers to enable their employers and clients to be IFRS 17-compliant by 2021.